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Investing

How To Grow Wealth In Your 30s

In this article we discuss how to grow wealth in your 30s. In addition, we define what net worth is and show you how to build wealth and improve your personal net worth.

Net Worth Definition

Before providing you with tips on how to grow wealth in your 30s, it is important to understand personal net worth. First, we should define what net worth means. Your net worth is not your income or what you earn. Instead, net worth is your assets minus liabilities. Said differently, personal net worth is everything you own minus everything you owe.

“Net worth is simply what you own minus what you owe. In other words, the total value of your assets minus your debts equals your net worth. For example, if you own a home worth $200,000 and you owe $100,000 on it, you have $200,000 in equity toward your net worth. To calculate your total net worth, add up all the things you own and subtract all the things that you owe money on.” – Dave Ramsey

How to Grow Wealth in Your 30s: The Easy Waymillennial wealth management

In short, if you want to learn how to grow wealth in your 30s, you must build your assets (like house, equities and cash) and shrink your debts (like credit cards, mortgage, etc.).

Net Worth Calculator

If you are wondering what your personal net worth is, there are many online calculators that are free to use. Nerd Wallet has a simple calculator that you can use to estimate what your current net worth is. Learning what your net worth is can give you a starting point to learn how to grow wealth in your 30s.

Obviously, you can also create your own spreadsheet to determine your net worth. In addition, you can simply write down your assets and liabilities on a piece of paper to help figure out your net worth and how to grow wealth in your 30s.

What is a High-Net-Worth Individual?

When people think of high-net-worth individuals, they imagine people like Leonardo DiCaprio (movie star), Elon Musk (inventor and investor) or Donald Trump (real estate tycoon). However, most wealthy people that have a high net worth live a simple, quiet life. The method for how to grow wealth in your 30s is not necessarily glamorous or exciting; In fact, becoming a wealthy requires sacrifice and discipline.

As a result, we’ve developed some guidelines that will show you how to grow wealth in your 30s. If you are able to follow these guidelines, financial success can be in your future.

Pay Off All DebtHow To Get 100 Dollars Fast

Most high-net-worth individuals did not get rich by borrowing money. In fact, most people with a significant net worth avoid debt. They know that when you have debt, money is working against you. As a result, it is important to pay down all your debt prior to taking the next steps. Later, you can make your money work for you, not against.

Create a Consistent Source of Income

Put Aside 10-15% of Your Regular Income for Investment

You don’t have to own your own business or be an entrepreneur to be a millionaire. There are many high-net-worth individuals who are average people who work 9-5 jobs every day, just like you.

One of the keys for how to grow wealth in your 30s is having a consistent source of income. Every month, or each paycheck, they divert 10-15% of their earnings to investment(s). An example would be investing in a 401(k), Investment Retirement Account (IRA) or Real Estate. Year after year, your money will build and work for you to create wealth.

Begin Saving Money

Saving Money teaches you the habit of not spending and allows you to take advantage of opportunities

Saving money is a lost art. However, saving money is one of the secrets of how to grow wealth in your 30s. Historically, people’s lives depended on saving money. If a natural disaster struck or just bad luck, people could fall back on the money they saved to stay alive. Today, life is easier. Credit is widely available to most people and we frequently borrow money for cars, houses and purchases on credit cards.

But, saving money is critical to becoming a high net worth individual for several reasons. First, learning to save money requires that you not spend all your money. Legendary investor, Warren Buffet, famously said that the most important rule of investing is “to not lose money.” So, don’t spend all your money. Instead, save some money. Saving money is an excellent habit to learn.

Second, saving money will give you the confidence to seize opportunities when they arise. When people live paycheck-to-paycheck, they waste their time struggling with bills, instead of focusing on future wealth creation.budgeting tips for beginners

Create a Budget

It’s important to keep track of your money. And a budget helps you achieve that objective. Having a balanced budget means spending less of your paycheck. Preferably, you will have a significant amount of money left over to pay off debt and for investing. In short, everyone should budget, whether you are a large corporation or just one person. In addition, creating a budget is your roadmap for how to grow wealth in your 30s.

There are many budget options online, including spreadsheets, mobile apps and even printable budgets. Check out our “Best Budget Apps” article for more information and recommendations.

Live below your means

High net worth individuals do not spend money on unnecessary expenses, such as eating out, new cars and designer clothing

In many cases, frugal living is the cornerstone of success for high-net-worth individuals and how to grow wealth in your 30s. This simply means spending less than you make. A simple monthly budget can assist you in determining whether you are meeting your goal.

Unfortunately, living frugally is not popular in the 21st century. Popular culture dictates what “normal” consumer behavior looks like. And it’s considered normal to go out and spend money at restaurants, on vacations and the like. In addition, it’s “normal” to buy a big house and drive a new car.

The reality for high-net-worth individuals is that they don’t ascribe to normal behaviors. People with the millionaire mindset only purchase what is needed. They don’t buy new cars or fancy things. As a result, the extra money saved from this frugal behavior is put to work in investments.

Develop a Financial Plan

Once you’ve developed the millionaire mindset, it’s time to create a financial plan. Write down the details of what you want to achieve. If your goal is to own one million dollars in real estate, then plan accordingly. Include details of how you will acquire money to invest and how it will be allocated. In addition, set a timeframe for when you expect to achieve your goal. Your budget will be an addendum to the plan. Finally, review the financial plan frequently and assess your progress.

Develop Good Habits

Good Habits Include Budget Control, Staying the Course, Investment Knowledge and Discipline

Developing millionaire habits is critical on the path to how to grow wealth in your 30s. Once you’ve established your goals and your financial plan, you must implement good habits. Good habits include:

  • Budget Control
  • Staying the Course
  • Investment Knowledge
  • Millionaire Habits and Discipline

Budget control means that you operate under a balanced budget. Spending is controlled so that remaining cash flow is routed toward smart investments. Good investments are critical for converting thousands of dollars into millions of dollars.

Staying the course requires that you consistently repeat what you are doing, so long as you are successful. If something doesn’t work, it can be changed. But the power of earning from compounding interest is continuously investing money.

Being a good investor requires that you continuously educate yourself. You want to learn as much as possible about your investments. You will accrue knowledge and wisdom on different investment strategies over time.

Learning what has worked for other high net worth individuals is the easiest and most secure strategy for success with money. High net worth individuals get up early each morning and focus on their goals. Investing money is a priority to them and their focus is on earning and business. Many successful high net worth individuals make time for self-development activities, such as exercise and meditation. And they make these habits part of their daily ritual.

Invest Early

The sooner you can get started on your millionaire journey, the better. Many high-net-worth individuals credit their success not to windfall earnings, but to incremental investing over long periods. Compounding interest is a powerful tool that can work for you on the road to how to grow wealth in your 30s.

Build Your Income

Maximize Your Income by Starting a Business or a Side Hustle

Once you’ve mastered budgeting and your debt is settled, you want to maximize the money that you earn. You will find that expenses remain almost the same from year to year, but increasing your income can have significant results. Earning more money means that your contribution to your investments will build your wealth more rapidly.

There are many ways that you can improve your income. For example, start a small business out of your home. Explore what you like to do in your spare time and determine if you can make money doing it. For example, photography can be a hobby or a business.

Other sources of income can be part time jobs, weekend work, side hustles or even buying and selling things.

Final Thoughts on How to Grow Wealth in Your 30s

Many High-Net-Worth Individuals Operate a Business, Network and Work with a Financial Team

First, many high-net-worth individuals reach their goal quicker by operating a small business. Owning a small business allows you to control how the company operates and take more profit for the extra labor you put in.

Second, maximize the networking that you do with others. Participate in conferences or just promote contact with like-minded people in your area. The network effect can have positive financial benefits for you. Don’t isolate yourself.

Finally, surround yourself with a financial team. Seek out a respected tax professional, attorney, business coach, etc. Sometimes an ounce of prevention is worth a pound of cure. Staying in good legal standing with state and federal regulations can help you build. In addition, these professionals can save you money in the long term.

These guidelines are the simplest path on how to grow wealth in your 30s. Want to learn more about saving and investing?

Read More:

Ways to Save Money on a Tight Budget

10 Things to Know Before Starting a Budget

The Best Budget App

How to Make $200 Fast

Best Budget Planner

Home Buying Power

Financial Planning Services

Value Investing Books

Wealth Building Cornerstones

Best Investing Books of All Time

How Much Savings You Should Have at 40

Why Saving Money is Important

Debt Elimination

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

Categories
Investing Retirement

Financial Planning For Women

We will explain financial planning for women with a step-by-step approach. In addition, we detail the basics of budgeting and how it can help you financially. We will also talk about things that affect financial planning, such as investment time-frame, risk and investing style.

Learning about financial planning for women can be challenging if you are new to investing. In the old days, investing was simple: stocks, bonds and real estate. Today, financial planning for women has become much more complicated with hundreds of choices that may be very complicated to understand.

The good news is that your investment portfolio can be as simple or as complicated as you want it to be. In addition, you don’t have to be rich to begin investing. In this article we will lay out a clear, 5-step approach to financial planning for women you can use to organize how you invest.millennial wealth management

Investment is defined as,

“the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.” –Dictionary.com

Summary of Financial Planning for Women

  1. Create and Implement a Budget
  2. Establish Goals
  3. Assess Personal Finances
  4. Determine Risk Tolerance
  5. Develop Investing Timeline
  6. Begin Allocating Funds for Investment

Prior to learning about investing, we will discuss the basics of budgeting. Here are some critical things you need to know about budgeting basics.

How to Create a Budget: Step by Step

Determine Your Income, Expenses and Calculate Disposable Income

Having a balanced budget means spending less of your paycheck. Preferably, you will have a significant amount of money left over to pay off debt and save for investing. In short, everyone should budget, whether you are a large corporation or just one person.

The budgeting tips for beginners that we will be describing include how to create a monthly budget. Many people pay bills once per month and may get paid once or twice per month. In a simple example budget, you can create a column for expenses and a column for income. At the bottom of the page, you can total each column and the difference in the totals is either how much money you have left over or how much money you are short at the end of each month.

Step 1: Determine Your Income

Figuring out what your income is for the month is usually pretty simple. If you get paid every two weeks, then your income is the amount that gets deposited into your bank account. This is the amount that is left over after taxes are taken out. Make sure to account for each time you get paid in the month. If you don’t know what you get paid, you can look at your W-2 Tax form.

Step 2: Determine Your Expenses

Determining what your expenses are will take more time. There are several ways to determine how much you are spending each month. One way is to keep receipts and use bank statements to figure out what was spent each month. The second way to determine what you spend is to begin writing down each expense as it comes along during the month.

Fixed and Variable Expenses

As you begin tracking your expenses and determining how you spend, you will see that there are two types of expenses: fixed and variable. Fixed expenses are those that the amount paid never changes. For example, a mortgage or a car loan payment will always stay the same value, which makes planning ahead easy

On the other hand, variable expenses may vary each month. For example, your electric bill or the amount you spend dining out varies from week to week. With variable expenses, it is recommended that you calculate an average over several months and use the average for your budget.

Wants and Needs

Another budgeting consideration is wants versus needs. While learning budgeting tips for beginners, try to categorize your expenses into two groups: wants and needs. For example, a need is something like electricity or groceries. These are the things that you need to live.

In contrast, wants are the things that you pay for that may not be necessary. For example, wants can be things such as eating at restaurants, spa memberships and vacations. Moreover, you will look closer at your group of wants later when we make cuts to the budget.

Step 3: Put all the Budget Pieces Together

Now that we know what our expenses and our income are, we can add up everything to determine if we are over or under budget. The goal of having a balanced budget and learning budgeting tips for beginners is so our expense column will be less than our income. For example, if your income is $2,000 per month and your expenses are $1,500 per month, then you have $500 leftover each month ($2,000-$1,500 = $500).

The $500 that remains each month is your disposable income. Typically, you want to have a plan for what happens to the disposable income; otherwise, extra money has a way of getting spent. Moreover, it is recommended that you save and/or invest this money. However, we will touch on that later.

Cut Expenses and Control Spending

Budget Not Balanced? Remove Expenses (Wants) from Your Budget: Memberships, Subscriptions, Etc.

If you are having trouble finding extra money in your budget, it may be time to cut expenses that are considered “wants.” No matter what kind of budget you have, its vitally important that you cut expenses. First, start by finding areas in your life where you can make cuts. It is helpful to make a list of what expenses are wants and needs. For example, paying for electricity is required; having a spa membership is not.

Getting Started with Investing

Now that you understand budgeting, it is time to take a look at investing. Investing can be seen as a step-wise process. Staying organized with budgeting and investing can make things easier and more achievable.

Step 1: Establish Goals

The first step in financial planning for women should be to determine what your financial goals are and what you wish to accomplish. Where do you see yourself in 10, 25 or even 50 years? The average life expectancy for Americans is around 78 years. However, you may have family members that live to be in their 90s and beyond. If you retire at 65 and live to be 95, will you have enough money invested to last through your retirement years?

Write Down Your Goals

If you want to retire at 65 and move to Portugal, then included this as part of your written goals. Begin by creating a journal, a spreadsheet or plan where you list exactly what you have planned for the future. This serves two purposes. First, writing down your goals makes what you want explicitly clear. It gives you a starting point and also provides you with the details that you will need to determine how you will reach your goals.

Second, the purpose of planning out your financial goals on paper (or electronically) is that you are signaling to yourself and others what you want. History has proven that the psychology of desire and intention is a powerful tool in accomplishing goals. Many wealthy investors credit their personal wealth and success to the philosophy outlined in the book, “Think and Grow Rich” by Napoleon Hill.

Step 2: Assess Personal Finances

Learn to Budget, Save, Pay Off Debt and Live Below Your Means

Budgeting is one of the critical steps that can help you take control of your life and control personal finances. In addition, preparing a budget allows you to not only know where your money goes, but also allows you to plan where your money will go in the future. Finally, it’s important that your money works for you, not against you in financial planning.

During financial planning for women, we also prepare ourselves for better quality of life by having more money. Having more money means that you have more power to dictate the kind of life you want, especially in retirement.

How Budgeting can help you:

  • Improve your credit score
  • Save for emergencies
  • Save and invest for retirement
  • Stop wasting money and curb bad habits
  • Promote a healthy, meaningful lifestyle
  • Buy a new home or upgrade your existing home
  • Obtain financial freedom

Pay Off All Debts

Before you can start financial planning, you must pay off all debts. Now that you’ve established your budget, cut personal spending to the bare minimum. You will take extra money that you have leftover in your budget and use it to pay down debts. Create a list or accounting of your debts, the corresponding balances and interest rates that you maintain. Use this information to help you keep track of your progress as you pay down debts.

If you are young and just starting out, hopefully your debts are minimal. Having minimal or no debt when you begin your journey toward wealth creation is a huge advantage. Paying off debt can take years and a great deal of sacrifice.

Living Below Your Means

While following a budget, you should be living below your means (hopefully). Unfortunately, living below your means is a philosophy that most people don’t follow these days. Living below your means requires that you spend less than what you make. For example, if your take home pay is $1500 per month, then living below your means is only spending $1,000 per month.

The extra money that you save from living below your means will serve two purposes. At first the extra money will be used to pay down debts quickly. Getting ahead requires that all debt be paid off first. Secondly, after the debt has been paid off, you will then use the positive cash flow to fund your emergency fund, savings and investments. Each of these is part of your net worth and the buffer between you and poverty. The more you can grow your savings and investment, the simpler and easier life gets.

Save Money Every Paycheck

Put Aside 10-15% of Your Regular Income for Investment

One of the habits that can help you reach your goals in financial planning for women is to start saving each paycheck. Make it a habit to take 10-15% of each paycheck and save it. After a short time, you will realize that you don’t even miss the money.

Make saving 10-15% of each paycheck easy by setting up an automatic money transfer, either to your investment account or to your savings account. For example, each time your paycheck is deposited into your checking account, have an automatic transfer set up that moves money into your savings account. Some people even have a savings account that is in a different bank to reduce the temptation of raiding the account.Reselling Products On Amazon

Step 3: Determine Risk Tolerance

What is Your Level of Risk?

Active Versus Passive Investing; Aggressive Versus Conservative Investing

To start, you must determine what style of investor that you are. First, the major categories of investment include active management or passive management. For example, a portfolio manager can determine what investments are in your fund and make decision for you using passive management; however, active management means that you reserve more control of your investments and perhaps you even use online services to trade individual stocks on a daily basis.

Second, you must determine if you are an aggressive or a conservative investor. Aggressive investing is utilized by those who want to take more risk and capture greater returns. This type of investing is considered acceptable for younger investors and for savvy investors who want to dedicate a small portion of their portfolio to higher risk. Conservative investing is a lower risk style of investing. Returns tend to be lower than the aggressive style, but come with lower risk. This style is best for those that desire lower risk and those who are getting closer to retirement age.

Step 4: Develop Investing Timeline

Estimate Retirement Age and How Much Money You Need to Retire

How old will you be when you retire? This is one of the questions that you want to answer during financial planning for women so that you can gauge your progress toward retirement. In addition, you can set goals for how much money you need when you reach the milestones of 30, 40, 50 and 60 years old and so forth.

Retirement Age

First, if you live in the United States and were born after 1960, you may be eligible to retire at age 67. Second, if you were born earlier than 1960, then the age requirement is 66. These are the ages where you may be eligible for Social Security Benefits. Consequently, you can look at the United States Social Security Benefits Website for additional details. They also offer a retirement calculator and benefits planner there.

If you want to narrow down how much money you will need for retirement, there are four primary factors needed.

  • Current Age
  • Retirement Age
  • Monthly Cost of Living (Estimate)
  • Life Expectancy

First, if you take your current age and subtract your retirement age, then that gives you how many years you will have to save for retirement. For example, if you plan to retire at 67, and you are 40 years old, then you have 27 years to save (67-40 = 27).

Planning for 30 years of retirement is a typical timeframe that most investors use. However, life expectancy has been increasing for Americans and you should also consider that you may live to be 100 years old.

Determine How Much Money You Need to Live on

You Will Need 70-80% of Your Current Salary for Retirement Expenses

While thinking about budgeting, take a closer look at how much money you need to live on each month. For example, what basic amount of money do you need each month to cover expenses? You need enough money to pay for a place to stay, food, electricity, etc. Don’t include things like vacations, luxury items or entertainment. Once you determine how much you need to live on, you can then start to figure out what retirement expenses look like.

Another common rule of thumb for estimating how much money you need when you retire is the 70-80% Rule. In other words, many experts believe that you will need at least 70-80% of your current income to make ends meet. For example, if you bring home $3,000 each month, then you will likely need approximately $2,100-2400 each month in retirement. This is a realistic way of estimating what you need to retire if you don’t want to do complicated calculations or spend a lot of time on the topic.

Step 5: Begin Allocating Funds for Investment

This step is the final step in financial planning for women. You will begin depositing money into your investments. The easiest way to start is to allocate a percentage of your earnings each month. You will then review your investment portfolio each year with your investment advisor to determine whether it requires changes. Your investment advisor can help you through financial planning for women.

Ideally, your investments will be divided into groups, with a certain percentage of your total investment allocation going to each group. For example, you may have chosen to invest in stocks, real estate, precious metals and cryptocurrency. You may be investing 50% in stocks, 25% in real estate, 20% in precious metals and 5% in cryptocurrency. Obviously, the percentage allocated to each group you choose will be determined based upon your risk tolerance.Budget Planning Process

Dollar-Cost Averaging

Many wise investors use “dollar-cost averaging” as a part of their financial planning for women. Dollar-cost averaging is simply dividing up the amount of money you have to invest over a longer time frame. For example, let’s say you have $1,200 to invest in the year 2021. Then each month, you will invest $100 ($1,200/12 months = $100/mo.). Your $1,200 investment would then be dollar-cost averaged over a one-year period.

This investment methodology means that you invest the same amount of money each week or month, no matter if the market goes higher or lower. Dollar-cost averaging takes the emotion out of financial planning for women and simplified investing. It also prevents investors from making bad decisions.

If you don’t know how much to invest, then start out simply. Every month, divert 10-15% of your earnings to investment(s). An example would be investing in a 401(k), Investment Retirement Account (IRA) and/or real estate. Year after year, your money will grow and work for you during financial planning for women to create wealth.

Diversify Investments

No one can predict the future to know what investments will do well and which ones will fail. As a result, we can improve our odds of success in investing my diversifying our investments. Diversification of investments means spreading your money over different investment sectors. For example, you may want to have some stocks, bonds, real estate and precious metals in your investment portfolio.

Tax Considerations

Some investments will inherently have higher tax implications than others. In many cases, timing is important when the asset is sold in determining how it is taxed. The level of taxation of an asset can impact your return on investment. For example, if you purchase a home, fix it up and flip it for a profit, it will be taxed at a higher rate than if you simply bought a home and lived in in for a few years.

Find a Good Financial Advisor

Many of the topics discussed regarding personal finance and investment complicated and you probably need the assistance of a financial advisor. A financial advisor can help you make better informed decisions about how to best invest your money. Be careful to select an advisor who is knowledgeable in their industry and who has a proven track record regarding investment.

Unfortunately, many “financial advisors” are simply sales people who know very little about investment and are simply trying to earn a commission by locking in your business. Do your research to find the best candidate. In some cases, good financial advisors charge an upfront fee for consultation because they do not earn a commission from helping you with investing.

Caveat on “Faux Investments”

Our list of investments did not include several financial products that some may consider investments. The reason we excluded these “faux investments” is because they don’t provide real returns on your investment and/or they may be risky. In addition, many of the faux investments may actually lose money on an annual basis, guaranteed.

For example, if you place your money in a savings account and nominally earn 0.1% interest on your savings, this might sound ok. However, if you consider that inflation is currently 1-3%, then your 0.1% rate of return at the bank is eaten up by inflation. In fact, you actually lost money from inflation, guaranteed.

List of Faux Investments

  • Savings Accounts – Money in savings earns very little interest and cannot withstand current inflation rates.
  • Options – Risky market plays that often expire worthless and are simply a hedge against other investments.
  • Futures – Risky market play that hedge against counter investments and require deeper level of investment and trading knowledge.
  • Initial Coin Offerings (ICOs) – Many of these are not available to investors in the United States and may have regulatory implications.

Types of Real Investments:

  • Stocks
  • Bonds
  • Mutual Funds
  • Retirement
  • Real Estate Trusts (REITs)
  • Real Estate (Land/Homes)
  • Annuities
  • Precious Metals (Gold, Silver, etc.)
  • Cryptocurrency (Bitcoin)
  • Insurance

Take Control of Personal Finances and Begin Investing

Now is a great time to begin getting your personal finances in order. Thinking and planning for the future are noble activities that we encourage at Piggy Bank Coins. Moreover, every adult should learn to budget, save money and invest at some time in their life. If you have a family, it is critical that you begin planning your financial future and develop a financial planning for women.

Read More:

Millennial Wealth Management

Wealth Building Cornerstones

How to Build Wealth in Your 20s

Baby Boomer Retirement Trends

How to Save a Million Dollars

Value Investing Books

10 Things to Know Before Starting a Budget

Is It a Good Time to Buy Stocks?

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, in order to help you make the best choice for you.

 

Categories
Retirement

Baby Boomer Retirement Trends

Nearly 80 million baby boomers are gradually retiring, and some have begun to cash in on their benefits. Furthermore, individuals born between 1946 and 1964 (“Baby Boomers”) are retiring at record rates, causing problems for social security. As a result, baby boomer retirement trends appear to be forming in the near future. And the big question is: Do you have enough money saved to retire?

Baby Boomer Retirement Trends: Retiring All at Once

Nearly half of baby boomers will pay in more than they receive from Social Security in the next few years. This, according to a recent report from the Center on Budget and Policy Priorities. Furthermore, analysis suggests that new baby boomer retirement trends are resulting as more beneficiaries are collecting social security than are paying into the system. On average, today’s retirees have an average income of about $50,000 a year, or $2,500 more a year. While baby boomers are likely to have higher incomes and lower poverty rates than their parents, they can also expect lower replacement rates.

As the baby boomer generation reaches retirement age, concerns about retirement planning will grow exponentially. In addition, there will therefore need to be good strategies to deal with them. In fact, learning about the baby boomer retirement trends can be critical to a retirement plan. To take pressure off the system, the younger generation should now work to develop their own retirement plan. This is a better option than saying goodbye to Social Security. Clearly understanding the baby boomer retirement trends is key.

Simultaneous Retirement

One issue that almost no one is talking about right now is the surge of baby boomers retiring soon. This large number of soon-to-be retirees who will be receiving benefits may create unusual baby boomer retirement trends.

“Over 64 million people, or more than 1 in every 6 U.S. residents, collected Social Security benefits in June 2020. While older Americans make up about 4 in 5 beneficiaries, another one-fifth of beneficiaries received Social Security Disability Insurance (SSDI). In addition, some recipients were young survivors of deceased workers.” – Center on Budget and Policy Priorities

Clearly, baby boomers have been the largest generation paying into the social security system for some time. However, now the rolls of baby boomers will shift as the baby boomer retirement trends unfold. As a result, baby boomers will depend upon government benefits and payouts. In addition, many boomers will pay reduced taxes and will not contribute to a pension or 401(k).

In particular, some retirement experts project that social benefits will be replaced by universal basic income. Furthermore, this could happen by the end of the twentieth century. As the number of baby boomers increases as retirees, the number of early retirement incomes for unmarried women is rising. For high-birth cohorts, a large proportion of these values have fallen to 40% for high-birth cohorts. In contrast, the values have fallen less than 1% for non-marital men.Baby Boomer Retirees

The Dark Cloud Over Social Security

However, there are a growing number of people who have doubts about social security. In fact, 42% of millennials believe they will receive retirement income from Social Security. In addition, about half of Generation Xers, who are now 31-46 years old believe this as well. Many believe that baby boomers and social security benefits may only benefit boomers. Just over a third of working millennials have an employer with a subsidized pension plan. However, more than a third do not have a plan. The share of young adults in the US with a full-time job is lower than in previous generations of the same age.

The retirement age for social security was increased, and about half of it has been raised gradually. If changes are not made to social security, the retirement age for Social Security may rise to 66 in 2026. Similarly, those who rely on Social Security are more likely to raise their retirement age to 65 or older.

When to Claim Social Security Benefits   

Boomers want to maximize their monthly Social Security payout by waiting until they claim as late as possible, but the truth is that after years of paying into the system, they are waking up to the fact that they will end up receiving benefits, and they want to know more about how it works. Many baby boomers face a rude awakening, as many expect too much from Social Security. Boomers will be 62 this year, and the number of years they will be eligible for benefits from the current 65-year retirement age will increase.

There are even more grumbles among younger baby boomers, who are studying strategies for when it would be in their best interest to claim their benefits. As baby boomers retire in greater numbers and federal program funding becomes less secure, dependence on Social Security will increase, according to a new report from the Center for Retirement Research at the University of California, San Francisco. But, as more baby boomers become eligible for benefits, the strategy for how benefits are claimed will rise and fall, according to the Institute for Social Policy’s (ISPR) report, “Benefit Eligibility and Benefit Maximization.”

The decline in the replacement rate of social security is partly due to the projected decline in the number of pensioners over the next 30 years. Another factor is the decrease in the retirement age at which benefits are claimed. Furthermore, the decline in benefits is driven by a projected decline in benefits.

The Age That You Will Retire

How old will you be when you retire? This is one of the questions that you want to answer so that you can gauge your progress toward retirement. Ultimately, it will help you determine how much savings you should have at 40. In addition, you can set goals for how much money you need when you reach the milestones of 50 and 60 years old.

Calculate Your Retirement Age

First, if you live in the United States and were born after 1960, you may be eligible to retire at age 67. Second, if you were born earlier than 1960, then the age requirement is 66. These are the ages where you may be eligible for Social Security Benefits. Consequently, you can look at the United States Social Security Benefits Website for additional details. They also offer a retirement calculator and benefits planner there.

If you want to narrow down how much money you will need for retirement, there are four primary factors needed.

  • Current Age
  • Retirement Age
  • Monthly Cost of Living (Estimate)
  • Life Expectancy

First, if you take your current age and subtract your retirement age, then that gives you how many years you will have to save for retirement. For example, if you plan to retire at 67, and you are 40 years old, then you have 27 years to save (67-40 = 27).how to save $5000 in 6 months

Next, how long will you live? Men and women live to be different ages. According to the World Bank, Americans live to be an average age of 78. So if you subtract 67 from 78, then you will need savings that will last for 11 years of retirement.

Finally, calculate how much money you will need annually (70-80% of normal salary) and multiply it by 11 years. This gives you the pot of money you will need to retire. So, using data from earlier examples, if you make $3000/month (12 x 3000 = $36000/year), we’ll multiply it by 80% to be on the safe side. Then, 36000 X .80 = $28,800/yr. You can survive on $28,800/yr.

Then, let’s find out how much money you need for all of your retirement. Note, this is an estimate. Many people live to be much older than 78, so you may consider adding a few years to your calculation to build a cushion.

Total Dollars Needed for Retirement (from example above):

$28,800/year X 11 years = $316,800

How much money you need to save each year to reach your retirement goal:

$316,800/27 = $11,733 each year (or $977/month)

Note, this doesn’t account for compounding interest on investments, which usually help you greatly when it comes to saving for retirement.

 

Investing 101: It’s Never Too Late To Start Investing

Take Control of Personal Finances and Dollar-Cost Averaging

Learning about investing doesn’t have to be complicated. If you are one of the baby boomers who are worried about the baby boomer retirement trends, you can still invest now. Once you establish your goals and how much money that you want to invest each month, you can then determine what kind of investments you wish to make. However, every adult should learn to budget, save money and pay off debt first. If you have a family, it is critical that you begin planning your financial future.

Many investors use “dollar-cost averaging” as a part of their investment strategy. Dollar-cost averaging is simply dividing up the amount of money you have to invest over a longer time frame. This investment methodology means that you invest the same amount of money each week or month, no matter if the market goes higher or lower. Dollar-cost averaging takes the emotion out of buying stocks.

What is Your Level of Risk?

Active Versus Passive Investing; Aggressive Versus Conservative Investing

First, the major categories of investment include active management or passive management. For example, a portfolio manager can determine what investments are in your fund and make decision for you using passive management; however, active management means that you reserve more control of your investments and perhaps you even use online services to trade individual stocks on a daily basis.Long term financial goals

Second, you must determine if you are an aggressive or a conservative investor. Many baby boomers continue to work and invest while collecting social security before the baby boomer retirement trends unfold. Aggressive investing is utilized by those who want to take more risk and capture greater returns. This type of investing is considered acceptable for younger investors and for savvy investors who want to dedicate a small portion of their portfolio to higher risk. Conservative investing is a lower risk style of investing. Returns tend to be lower than the aggressive style, but come with lower risk. This style is best for those that desire lower risk and those who are getting closer to retirement age.

Baby Boomers Retirement Trends Wrap Up

Clearly issues with the baby boomer retirement trends will continue to be challenging. However, the outlook for younger generations is not as good, considering inflation and the concern with the social security program’s ability to provide benefits. As a result, younger people should make an effort to plan their retirement using savings, investments and creating other income streams that will provide money needed in retirement.

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Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

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